In life, you may find yourself in dire need of emergency cash. 

Instead of waiting for bank loans that require a lengthy approval process, you’ll probably opt for a licensed money lender with simple terms, quick processing time, trust, and ease of repayment. 

These loans are fairly easy to acquire, and money lenders rarely ask for collateral if your business is well established. 

Although readily available, these hard money loan interests are higher than that of conventional bank loans. This is due to their convenience and the increased risk for the lenders. 

So before taking up a loan from money lenders, you need to consider other options, such as the different financial programmes provided by various government agencies. 

For instance, many unlicensed money lenders (UMLs) in Singapore also lend out money and are dangerous because of the unregulated harassment approaches they use to chase debts. 

If you find yourself in such a situation and want to make a complaint about a money lender, this guide will tell you how. 

Factors To Consider Before Taking Out A Loan From Money Lenders

Based on your loan purpose and needs, licensed money lenders will go through your credit score and finances. 

Usually, they tend to be more lenient with your credit score compared to a bank. This implies a higher chance of securing a loan from money lenders even if your credit score is below average. 

On the other hand, there’s another popular type of financing known as unlicensed moneylending. 

This is where an unlicensed individual, usually known as a loan shark or an “Ah Long”, lends money to another person. However, such lenders use unregulated harassment means to chase their debts.

In most cases, these means harm the neighbouring communities, and loan sharks may resort to violence to recover their debt. 

In case of default, you may lose more than you bargained for, and it’s therefore imperative to take caution before going this route. 

So before taking up a loan with a licensed money lender, you need to keep these factors in mind:

  • Consider other options, such as the different financial assistance programme given out by various government agencies.
  • Know that you are legally obliged to fulfil any loan agreement you sign with a licensed money lender.
  • Ensure you are able to abide by the terms by factoring in your financial obligations. Always borrow what you need and can repay, as defaulting will affect you and your family.
  • The law requires money lenders to explain everything in simple language and give you a copy of the loan agreement. Ensure you completely understand the contract terms, the repayment period, the interest rates, and applicable fees.
  • Be wary of contractual terms that allow money lenders to lodge a caveat on the sale revenues from your real estate property upon default. 
  • Shop around and compare different money lenders for the best terms. Do not rush into committing to a loan until you know its terms and conditions. 

Unfair Practices Of Money Lenders

As previously mentioned, you can easily find an unlicensed money lender for an emergency loan. 

However, with short and attractive loan terms, an illegal money lender in Singapore, also known as a loan shark, uses predatory loaning methods. 

This means they often target families in dire financial circumstances or those with low incomes. 

These illegal lenders are unlicensed and operate outside the law. They usually use abusive, fraudulent, deceptive, or discriminatory lending practices, especially when collecting their debts. 

Signs Of Predatory Lending Practices

High Or Hidden Fees That Inflate Annual Percentage Rate (APRs)

APR is the common method of measuring the total loan cost. This includes the fees and interest rate to help you accurately compare the costs of different loan types. 

On the other hand, hidden fees are the parts that might include fees such as balloon payments or prepayment penalties. 

These fees can complicate the comparison between conventional loans and loans with high fees.  

Loans That Could Trap You In A Debt Cycle

Some loan types have high fees, making it difficult to repay them in time. For instance, most borrowers who take out payday loans refinance or roll over the initial borrowed amount. 

Every time you do this, you’re charged extra fees, and you’ll end up paying more in fees than the initial loan amount. 

Promises Of No Credit Check

Most desperate borrowers find the no-credit-check option to be an answered prayer. However, this could be a red flag showing that the lender uses deceptive or unfair practices. 

A credit score review shows the lender you can be able to repay the loan in time. If your lender is not concerned, it’s wise to steer clear.

Bank Access Is Required

Most financial institutions provide customers with the convenience of autopay but will never require bank account access as a loan condition. 

However, you may come across some lenders requiring you to write a postdated check for the complete loan balance.

They could also ask you to allow them to electronically debit money from your checking account. In such a scenario, the lender will automatically withdraw your loan repayment once it’s due.

The Lender Has An Uncertain Reputation

A rule of thumb is to check for a lender’s customer reviews. If a lender has a lot of negative reviews or feedback, this is a clear sign to stay away. 

What Is Unlicensed Moneylending?

Unlicensed or illegal money lending includes an array of activities, from licensed individuals acting unlawfully, to the extent of an unlicensed individual giving cash loans. 

Unlicensed moneylending is risky because of the unregulated harassment techniques used by loan sharks in Singapore to collect their debts.

These techniques are usually harmful to communities, and the lenders could even resort to violence to collect their debts. 

If you have other alternatives, staying away from them is highly advisable. 

When To Make A Complaint Against A Licensed Money Lender

 Keep in mind that many illegal or unlicensed money lenders in Singapore are looking to leverage on desperate people. 

To ascertain that a money lender is licensed, confirm with the Ministry of Law’s list of licensed lenders in Singapore. The lender should have a money lending license in Singapore. In the list, you can also see the blacklisted moneylenders in Singapore.

 Ensure you confirm the phone number of a licensed money lender is the same as the number listed on its website. Also, confirm the lender’s physical address, which most illegal lenders lack. 

If your licensed money lender has engaged in unfair practices towards you, you can lodge a complaint through different channels. 

Make a police report or file the matter at a Smalls Claims Tribunal or the Court under the Consumer Protection Act. The courts will waiver loan transactions that are substantially unfair or excessive.

Some of the common unfair practices of money lenders include:

  • Financing excessive fees and points
  • Taking advantage of unknowing borrowers such as the elderly and low-income individuals
  • Engaging in fraudulent, deceptive, or unfair conduct during the loan origination process

You can also lodge a complaint against them and challenge a foreclosure action. 

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How To Make A Complaint Against A Money Lender

Remember that you should not condone any form of threats or harassment from licensed money lenders. 

To ensure a professional and safe money lending sector in Singapore, the Registry of Moneylenders in Singapore regulates all licensed money lenders. 

Some of the forbidden money lending practices include:

  • Retaining your personal identification documents such as your physical NRIC, passport, driver’s license, and ATM card
  • Using offensive language or behaving in a threatening manner towards you
  • Withholding any amount of your principal loan amount
  • Granting a loan without giving you a Note of Contract or conducting due diligence. This also includes granting a loan before receiving the loan application form and the supporting documents
  • Requesting you to sign an unfinished or blank contract for the loan
  • Keeping a scanned copy of your documents

How To Make A Complaint Against A Money Lender

In such instances, you can contact the Registry of Moneylenders to lodge a complaint online on the Ministry of Law’s website or call 1800-2255-529. 

Ensure you include all the details about the money lender, such as its license details, contact information, and business name to help facilitate a comprehensive investigation. 

You could be requested to avail yourself for an interview with the officers handling your case to provide additional information for the investigation. 

Remember that your details will be safe and will not be disclosed to the money lender without your approval. Ensure that the money lender gives you a cautionary statement on abusive practices. 

Note that a licensed money lender has the legal right to sue you if you consistently fail to repay your loan. 

Always ensure you can adhere to the contractual terms before borrowing from a licensed money lender. 

Help To Repay Your Loan

If you are struggling to make payment every month, there are a few things you can do. 

Negotiate with your licensed money lender on refinancing or extension before the next installment or the loan term. Although you might incur extra fees, it can prevent late payment charges. 

If you are unable to pay back a debt of at least $15,000, you can file for bankruptcy. This will stop the money lender from pursuing any legal action until you’re cleared from bankruptcy.

However, this move can negatively affect your credit report and score, and you’ll also incur extra attorneys and court fees. 

In addition, if your debt does not surpass $100,000, you can take the Debt Repayment Scheme under the Covid-19 Temporary Measures Act. This amount has increased to $250,000, and by doing so, you prevent the money lender from pursuing legal action against you. 

This will give you time to negotiate a suitable repayment schedule. Note that legal action can be taken if the Court grants permission. 

How Not To Fall For Loan Scams

Predatory lenders and scam artists usually capitalise on a crisis. 

Whether during a recession or in the middle of a public health crisis such as Covid-19, illegal money lenders and predators see this vulnerability as a chance to take advantage of people. 

In recent years, millions of people have lost to government impersonation scams. This is after they were hoodwinked about dealing with a legitimate government agency. Loans scams are loans given out under false pretense. The lenders usually dupe their victims with promises they can’t deliver, hiding the actual loan cost. 

Loan scammers will use false caller ID numbers, fake company logos, and other forms of trickery to mimic the legit agencies in order to gain trust. They may also do one or more of the following:

  • Charge high rates of interest and hidden fees
  • Gain permission to access your personal accounts or legal ownership of your assets
  • Obtain personally identifiable information (PII) or financial information such as your credit card number or NRIC
  • Charge costs for services and products you won’t receive

Loan scams usually take many different forms but usually employ the same strategies. Below are the most common red flags:

Pressure to act now: This creates a false sense of urgency to make you overlook the red flags.

Guaranteed approval: Legitimate lenders require you to meet specific criteria such as proof of income or credit score and report. Loan scammers will advertise guaranteed approval and subprime loans, which is an apparent scam.

Debt cancellation: Scammers promise they cannot eliminate your debt, especially student loans.

Other red flags to look out for include:

  • Being advised to cut off contact and communication with your creditors
  • Loan offers made online or over the phone
  • So-called government agencies are texting or calling you, claiming you owe them money
  • Requesting payments via untraceable means such as cash, prepaid cards, or cryptocurrency
  • The lender doesn’t have a physical address
  • Asking for upfront payments before receiving the services or seeing the paperwork

7 Things About Licensed Money Lenders In Singapore

  1. The Ministry of Law regulates them
  2. There are channels to lodge complaints if you’re threatened or harassed
  3. You can be sued if you fail to repay your loan
  4. Foreigners in Singapore can likewise borrow from licensed money lenders
  5. You can loan up to six times your salary if earning at least $20,000 annually
  6. You won’t be charged interest of over 4% monthly
  7. The total charges incurred on a personal loan can’t surpass the principal loan amount

If you’ve experienced any form of threats or harassment form your licensed money lender and unsure what to do, we’re here to help. 

U Credit’s professional finance experts are always on standby to walk you through the tedious process and ensure a fair trial. Contact us today.